The S&P 500, Stablecoins, and the IRS

What we learned about Business & Finance this week.

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Good morning. It's Thursday, April 9, and welcome to this week's Business & Finance newsletter. Today, we're covering the S&P 500, stablecoins, and, in the final iteration of our tax basics series leading up to Tax Day, the IRS. If you have feedback for us (or just want to say hi), we're all ears—hit reply to this newsletter to send us a note!

As always, thank you for being a reader.

—Phoebe Bain, 1440 Business & Finance Section Editor

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500 Miles

What is the S&P 500?

Known for providing a snapshot of the US economy, the S&P 500 is a stock market index composed of 500 large US companies across a variety of industries, including telecommunications, technology, and financial services. Created in 1957 by financial data firm Standard & Poor's (now S&P Global), the index represents roughly 80% of the US stock market's value.

The companies in the S&P 500 are chosen by a selection committee with strict criteria: They must be profitable for the four most recent quarters, have a market capitalization above $22.7B, and more. Each company in the index is weighted by its market capitalization, so companies with higher market caps have a greater impact on the index.

The S&P 500 is a list of stocks, not an actual security. However, investors can buy into financial vehicles like index funds that track the S&P 500's performance, giving them exposure to the index with relatively low long-term risk and minimal management.

Explore everything else we've found on The S&P 500.

Also, check out ...

> Watch how the S&P 500 is actually calculated. (Watch)

> Inside the secretive S&P 500 selection committee. (Listen)

> A timeline of S&P Global's history. (View)

> See how the S&P 500 performed in the first 100 days of each modern US presidential term. (View)

In partnership with Northwestern Mutual

Got Money on the Mind?

Good, because tax season is in full swing–and it comes with some unique opportunities. For example, did you know doing your taxes is also an ideal time to do a deep dive on your finances? That’s because your return can show you clues on where (and what) you can improve on…as long as you know where to look.

That same information can also help you update your goals and identify areas you want to level up your financial game, which is why Northwestern Mutual recommends sitting down with an advisor to see how you can make your money work for you.

There are plenty of ways you can tailor your financial plan to help grow and protect your money. The only issue is, it can be a lot to navigate, especially with the busyness of everyday life–unless you have a trusted financial advisor like the ones at Northwestern Mutual. They can help you understand which tax laws apply, uncover blind spots, and lock in your financial future. Get matched with an advisor right here and make some money moves today.

This publication is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.

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Stablecoins, explained

A stablecoin is a type of cryptocurrency created to remain stable in value. Specifically, a stablecoin's value is usually pegged to that of another asset, such as the US dollar. That way, it can maintain a fixed worth. For example, popular stablecoins like Tether (USDT) and USDC were designed so that one token would always equal roughly one US dollar.

Many see stablecoins as a place to park money during times of volatility—whether that's in the crypto markets themselves, or for people living in nations with unstable national currencies.

When stablecoins are pegged to a stable fiat currency like the US dollar, they offer a way to ensure one's funds remain valuable. Although less common, stablecoins can also be pegged to commodities like gold, or even other cryptocurrencies—the stablecoin DAI, for instance, is backed by ethereum.

Notably, stablecoins are actually considered tokens rather than coins. Tokens are built on top of an existing blockchain, rather than running on their own blockchain, the way a coin (like bitcoin) would.

Explore everything else we've found on Stablecoins.

Also, check out ...

> The world's largest stablecoins by market cap. (View)

> What happened to USDC's reserves at Silicon Valley Bank when the bank collapsed? (Read)

> The history of stablecoins, visualized. (View)

> What is the GENIUS Act? (Read)

Everyone's Favorite Government Agency

The Internal Revenue Service, 101

The Internal Revenue Service, or IRS, is a division of the US Treasury Department that specializes in federal taxes. It enforces what is known as the Internal Revenue Code, collects taxes, and enforces tax laws.

Given its role in diverting household income streams, it also has a bad reputation. Half of Americans had an "unfavorable view" of the IRS as of 2024. In a ranking of 16 well-known federal agencies by popularity that year, the IRS came in dead last, behind both the Department of Justice and the Department of Education.

Specifically, the IRS is responsible for determining, assessing, and collecting internal revenue in the US, such as personal and corporate income taxes; excise, estate, and gift taxes; and payroll taxes for the nation's Social Security system (state governments are responsible for collecting state taxes). These taxes help pay for government spending on everything from maintaining roads to funding the military. In 2024, the IRS collected roughly $5T in tax revenue.

Explore everything else we've found on the IRS.

Also, check out ...

> The Beatles song "Taxman" was inspired by Britain's tax structure. (Read)

> The IRS has a long history of scandal. (Read)

> What happens if you commit tax evasion? (Watch)

> Fifteen red flags that might result in an IRS audit. (Read)

One Story We're Taking Stock In

Elon Musk's aerospace company SpaceX recently announced plans to IPO—and it's expected to be the largest initial public offering in history. With relatively few companies IPOing in recent years, many investment banks are doing whatever it takes to get their hands on the deal—including, apparently, making significant investments in Musk's Grok AI chatbot.

The story below (one of the most captivating pieces we read this week) outlines Elon Musk's demand that any institution working on the IPO purchase Grok subscriptions, and banks' enthusiastic responses—some have agreed to spend tens of millions of dollars on the chatbot.

> Big banks seeking a piece of SpaceX’s IPO must subscribe to Elon Musk’s Grok. (Read)

> Why the number of publicly traded companies has decreased in recent years. (1440 Topics)

In partnership with Northwestern Mutual

Big Tax Return Incoming?

There are some big changes to our taxes this year…and that may mean more money for you. The more important question is: what are you going to do with it? Before you splurge on something one-and-done like a vacation (even though we do love those), consider meeting with a financial advisor to find out how to maximize the monetary impact of your return.

And though it may have been fun to get that influx of cash, it’s not always that simple. Your advisor can help explain why getting a refund isn’t necessarily a good thing—recommending strategies to maximize your growth all year long.

This publication is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.

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Best of the Week

We curate hundreds of resources into 1440 Topics each week. Here are some of our favorites from the world of business and finance.

> Inside the multimillion-dollar pregnancy test industry's origin story.

> The original 1977 memo for Sequoia Capital's investment in Apple.

> Why the information Americans have about our tax system might be misleading.

> The difference between prediction markets, sports betting, and investing.

> Stats that reveal the average American's current financial picture.

> What is disinflation?

> The two categories of federal spending, explained.

> Why companies go public.

> How to rebuild your credit score.

> See how student loan debt varies by state.

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The S&P 500, Stablecoins, and the IRS